EXCELCARE_(CAMBRIDGE)_LIM - Accounts

The director presents the group strategic report for the year ended 31 March 2023.

Excelcare (Cambridge) Limited operates 15 (2022:16) care homes and a domiciliary care agency across London, Cambridge and Milton Keynes caring for residential and nursing clients funded privately as well as by the Local Authority. In all, the group operates a total of 903 beds (2022: 992).

The results of the year and the financial position of the company and group were considered satisfactory by the director.

The group further consolidated its position over the prior year, with demand continuing for its services through a long-established reputations amongst stakeholders for quality.

Revenue was up by 4% to £51.1m (2022: £49.1m) while operating costs (including the cost of sales, distribution expense and administration expense) increased to £49.0m (2022: £45.7m). Employment costs increased by 2.3% to £32.7m (2022 £32m).

The gross profit margin increased by 1.3% from 38.2% in 2022 to 39.5% in 2023.

Net assets amounted to £17.3m (2022: £12.2m).

The group is subject to a number of statutory inspections by both the local authorities and the Care Quality Commission (CQC). During the financial year, we were compliant in all our services and met all of our other statutory obligations. Two inspections were undertaken by the CQC during the financial year; both were rated as 'Good'.

In November 2022, the decision was taken to close Queens Oak Care Home in Southwark. With the lower fee rates being paid by the council and increased competition in the local area, the home was unable to remain viable. We were able to accommodate a number of residents in our other care homes in Sydenham, Lambeth & Tower Hamlets although the majority moved to homes outside the Excelcare group.  

Principal Risks and Uncertainties

Compliance risks:

The challenges that we face have predominantly been associated with maintaining our reputation amongst commissioners, regulators and other key stakeholders. All the group’s services were rated as ‘Good’ or ‘Outstanding’ at the end of the financial year. Subsequent to the year end in September 2023, we have had two further inspections, one home rated ‘good’ and one home was rated ‘Inadequate’, appropriate action is being taken to address the findings of the report.

Following the CQC inspection and subsequent report, we undertook a root cause analysis of why the home went from ‘Good’ to ‘Inadequate’, with the findings being localised issues within the home and not a group concern. The findings of the CQC inspection and our internal investigations are now being addressed with a robust action plan, this includes an extensive programme of re-training and monitoring, alongside weekly communication with CQC, Social Services and the ICB. The group is committed to the improvement of the home and appropriate action will continue until the home has reached a good standard, with strong processes and monitoring in place.

Within the group, there is a continued emphasis on ensuring CQC Compliance and maintaining good governance across all our homes; this must be effective and include assurance, auditing systems and robust processes. These must assess, monitor, and drive improvement in the quality and safety of the services provided, including the quality of the experience for people using the service. The systems and processes must also assess, monitor, and mitigate any risks relating the health, safety and welfare of people using services and others. As a group we continually evaluate and seek to improve our governance and auditing practice.

Through such evaluation we have identified the need for a digital transformation program across our care, compliance, people, and financial systems. The digital transformation will bring integration; faster access to important information; better levels of care; maximising resources; improved outcomes and much more, this will all aid our mission to be 80% paperless by 2025.

The regular quality assurance monitoring is reinforced by a vigorous programme of staff training and development that exceeds the minimum standards.

Over the years, Excelcare has built strong partnerships with the local authorities in which it works, this ensured our occupancy rates were protected to a large extent during the height of the pandemic. During this financial year, the effect of Covid 19 has gradually receded, with occupancy and self-funder referrals returning to pre-pandemic levels.

The effect of Covid remains within our homes, we continue to experience challenges in recruiting experienced team members and strive to achieve zero agency usage across the group. This has been difficult during the year, however the easing of immigration rules in the care sector has helped to alleviate the situation and maintain a safe and effective team.

The demand for beds has remained strong over the year and into the new financial year, with the group continuing to operate 15 homes and a domiciliary care provision. At the start of the year, total occupancy of the group was 930 and at the end of the financial year occupancy decreased to 913, however this was due to the closure of one home and resulting reduction in available beds from December 2022. Overall, occupancy in the remaining homes has increased with private occupancy increasing by 13%.

The Director has assessed the value of reserves and the operations of the group and does not consider that there are material uncertainties related to events or conditions that cast significant doubts on the group’s ability to continue as a going concern.

The financial statements are therefore prepared on a going concern basis.

Financial risk management and policies

The group uses various financial instruments that include cash, trade debtors and creditors that arise from its operations. The group is exposed to a number of financial risks, which are described in more detail below.

Liquidity risk

The directors closely manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs by monitoring the working capital requirements.

Credit risk

The group has no significant concentrations of credit risk. The group has implemented policies that require appropriate credit checks on potential residents before services commence.

The group is not exposed to material levels of credit and liquidity risks. Management monitors the net debt, banking facilities and cash flows on a regular basis and ensures that adequate working capital facilities are in place.

Inflationary risk

The group has faced financial risk from inflationary pressures over the past two years. The increases in the National Living Wage (NLW) and Real Living Wage (RLW), has been the predominant driver in the significant increase in the groups cost base. This has been further exacerbated by significant rise in energy, food and insurance costs along with higher than usual inflation across other areas. The group’s budgets anticipate a higher level of inflation given the economic environment and international events, however the level of uncertainty remains a concern.

Financial instruments

The group's policy is to finance its operations from retained profits, inter-company borrowings and bank facilities.

The financial instruments utilised by the company are borrowings, short-term cash deposits and items such as trade creditors which arise directly from its operations.

The Director considers the financial key performance indicators to be turnover, gross profit margin and operating profit. For the year ended 31 March 2023, revenue was up by 4% over the prior year to £51.1m (2022: £49.1m).

The gross profit margin increased by 1.3% from 38.2% in 2022 to 39.5% in 2023. The group made an operating profit of £5.7m (2022: £5.8m).

The key non-financial indicators are home occupancy and the quality of care provided to residents. The average occupancy rate was 95% (2022: 94%).

Future Developments

Management remain vigilant on the quality of each of our services, with each service constantly reviewed for continued improvement, with staff and management receiving ongoing support and training to enhance standards.

There is further opportunity to grow revenue through both existing and new services and management continue to proactively explore all options, albeit with significant challenges.

The group moves into 2023/​24 in a strong position, but remains cautious about the outlook due to the challenging employment situation, increased expectations, greater regulation and continuing pressure on fee levels.

Section 172 Statement

The Director of the Company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows:

A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to:

•    the likely consequences of any decisions in the long-term;

•    the interests of the company’s employees;

•    the need to foster the company’s business relationships with suppliers, customers and others;

•    the impact of the company’s operations on the community and environment;

•    the desirability of the company maintaining a reputation for high standards of business conduct; and

•    the need to act fairly as between shareholders of the company.

The Director has always taken decisions in the long term interest of the Company. The strategy takes into account economic and political conditions, whilst incorporating the family values of the organisation. Our business model has delivered value as demonstrated by the growth of the company.

- Engaging with our employees:

Our staff are fundamental to the delivery of our plan. The Company is committed to being a responsible employer in our approach to the pay and benefits our staff receive. For our business to succeed we need to manage our people’s performance and development and bring through talent while ensuring we operate as efficiently as possible. We have always recognised the importance of treating every one of our staff with respect and trust. The Company has a well-developed structure through which it engages regularly with staff to discuss and understand matters concerning them.

Operational excellence is important to the Company and is integral to our plan. We work closely with our suppliers throughout the year. We regularly review the performance of suppliers and oversee the risks in the supply chain environment including our Modern Slavery Act responsibilities.

- Communities and environment issues:

We are very aware of the Company’s responsibilities towards the communities in which it operates and to the environment. See director's report on Greenhouse reporting. The Company is committed to responsible energy management and will practise energy efficiency.

- Standards of business conduct:

We have defined key activities to make sure we can continue to monitor and assess the strategic implications on our businesses of any future changes in policy or regulation, and advocate for appropriate change in these areas.

- Governance:

Strong governance and risk management are key to achieving our vision of being the most trusted care provider. The Board's role is to provide clear leadership in setting strategy and risk appetite, and to see management's implementation of that strategy within a prudent and effective governance and risk management structure.

Overall 2022/23 was a successful year for the group with the delivery of high quality and well-received services and the gross profitability went up.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 March 2023.

The principal activity of the company and group continued to be that of the operation of nursing homes and home care for the elderly.

The results for the year are set out on page 13.

No ordinary dividends were paid. The director does not recommend payment of a further dividend.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

Apart from the care staff who attend to the vulnerable residents, applications for employment by disabled persons are always fully considered in the finance and administration department, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group is committed to maintaining a working environment where staff are individually valued and recognised.

The group appreciates their responsibility to encourage and assist in the employment, training, promotion and personal career development of all employees without prejudice and the group places value on the involvement of its employees and keeps them informed, not only on matters affecting them as employees, but also on various factors affecting the performance of the company. This is achieved through both formal and informal meetings.

The engagement with suppliers, customers and others is detailed under Section 172 in the Strategic Report.

The auditor, KLSA LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

As per the requirements of the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 which came into force on 1 April 2019, the group is required to present the carbon footprint of its operations and measures introduced to improve efficiency.

ESOS methodology (as specified in Complying with the Energy Savings Opportunity Scheme version 6, published by the Environment Agency 28/10/2019) used in conjunction with Government GHG reporting conversion factors.

The chosen intensity measurement ratio is total gross emissions in metric Kilograms CO2e per resident, the recommended ratio for the sector.

We are committed to responsible energy management and will practise energy efficiency throughout our organisation, wherever it’s cost effective. We recognise that climate change is one of the most serious environmental challenges currently threatening the global community and we understand we have a role to play in reducing greenhouse gas emissions.

Increasingly our sites are being switched to using energy efficient LED lighting with motion sensors installed.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Excelcare (Cambridge) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2023 and of the group's profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report. However, because not all future events can be predicted, this statement is not a guarantee as to the group's ability to continue as going concern.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

To identify risks of material misstatement due to any irregularities, including fraud and non-compliance with laws and regulations, we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

• the engagement partner ensured that the engagement team collectively had the appropriate competence; capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

• we identified the laws and regulations applicable to the group and parent company through discussions with directors and other management, and from our commercial knowledge and experience of the sector; and

• we focused on specific laws and regulations which we considered may have a direct material effect on the operations of the group and parent company and the financial statements of the group, including the Companies Act 2006, taxation legislation and data protection, employment, health and safety legislation and Care Quality Commission (Registration) Regulations 2009.

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and

• investigated the rationale behind significant or unusual transactions.

• reviewed the financial statements disclosures and determining whether accounting policies have been appropriately applied.

• obtaining third-party confirmation of material bank balances.

• documenting and verifying all significant related party balances and transactions.

To address the risk of non-compliance with laws and regulations, we communicated identified laws and regulations with those charged with governance and our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation) and taxation legislation (including payroll taxes) and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statements items.

Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the Company’s license to operate. We identified the following areas as those most likely to have such an effect: Care Quality Commission’s Inspections and healthcare and safety legislation regulations. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards; for instance, any non-compliance with laws and regulations and fraud which is far remote from transactions reflected in the financial statements would diminish the likelihood of detection. Furthermore, the risk of not detecting a material misstatement due to fraud is greater than the risk of not detecting one resulting from error.

Fraud may involve deliberate concealment by, for example, forgery or intentional omissions, misrepresentation, or through an act of collusion that would mitigate internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £3,274,841 (2022 - £1,846,775 profit).

Excelcare (Cambridge) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Kalamu House, 11 Coldbath Square, London, EC1R 5HL.

The group consists of Excelcare (Cambridge) Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Excelcare (Cambridge) Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 March 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

In accordance with their responsibilities, the directors have considered the appropriateness of the going concern basis for the preparation of the financial statements. For this basis they have reviewed the financial and cash flow projections for the next 12 months from the date of the approval of the financial statements.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

In addition, the Directors are not aware of any unlikely event, conditions and business risks beyond this point that may cast a significant doubt on the company's ability to continue as a going concern.

Care homes income is recognised per bed occupancy. Homes care income is recognised by the number of hours worked by staff. Turnover is recognised as it is incurred, either daily, weekly or monthly. Where charges are billed in advance these are recorded as deferred income.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Negative goodwill amortisation is restricted to the depreciation charged in the profit and loss account of those companies. Positive goodwill is written off in annual instalments over its estimated useful economic life of fifteen years.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks comprise food and consumables which are used for own consumption and are valued on a First In First Out (FIFO) basis and are carried out a the lower of cost and net realisable values.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Comparatives

There were no changes in the presentation in the current year.

In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Management assess for impairment at each balance sheet date and an impairment provision is required if the expected present value of the cashflow is less than the carrying amount. Individual non-significant balances are measured on a group basis.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Management reviews the useful lives and residual values of the tangible and intangible assets on a regular basis. During the financial year, the directors determined no significant changes in the useful lives and residual values. The carrying amounts of intangible and tangible fixed assets are disclosed in note 13 and note 14.

The monetary liability for employees' accrued holidays and management approved bonus at the reporting date is recognised as an expense accrual.

The grant income in the year refers to the support received from government schemes for Workforce funding and Market Sustainability.

Inter-group balances have been written off due to debt waivers among group companies.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Depreciation and residual values

The assets' residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively.

De-recognition

Tangible assets are de-recognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

Details of the company's subsidiaries at 31 March 2023 are as follows:

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

A defined contribution pension scheme is operated for all qualifying employees.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The remuneration of key management personnel is as follows.

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The balance receivable from related parties who are not wholly owned by the group at the year end date as follows:

Castlebar Healthcare Limited - £537 (2022 - £1,764,965)

Highfield Limited - £164,000 (2022 - £164,000)

St Fillian Healthcare Limited - £956,883 (2022 - £164,618)

Dovercourt Healthcare Limited - nil (2022 - £406,877)    

Saffron Healthcare Limited     - £981,097 (2022 - £178,384)

Abbotts Care Centre Limited - £3,506,680 (2022 - £446,130)

Excelcare Securities Limited - £7,750,000 (2022 - £7,750,000)    

Excel Portfolios Limited - £5,000,000 (2022 - nil)    

Excelcare Holdings Limited - £430,070 (2022 - credit balance of £77,000)

Excelcare Investments Limited - £200,357 (2022 - credit balance of £146,603)

Excelcare Securities Limited - £174,920 (2022 - credit of £84,247)                

There were material transactions between the group companies and Castlebar Healthcare Ltd, St Fillan Healthcare Ltd, Dovercourt Healthcare Ltd, Saffron Healthcare Ltd, Abbotts Care Centre Ltd and Excelcare Holdings Ltd - the movements represent the transfer of funds to the group's treasury account and the re-assignment of inter group balances.

There were also material transactions between the group and Excel Portfolios Ltd, the ultimate parent company - the movements represent the advancement of funds in the normal course of business activities.

There were also material transactions between the group and Excelcare Securities Ltd and Excelcare Investments Ltd which are the landlords for the companies within the group. The nature of the transactions were rental charges and payments.

The balances receivable from related parties who are connected companies due to common control at the year end are as follows:

Dinardo Care and Supports Limited - £7,210,197 (2022 - nil)

The nature of the transactions were allocation of group purchasing costs and the re-assignment of the inter group balances.

No guarantees have been given or received.

The balances payable to related parties who are not wholly owned by the group at the year end date are as follows:

Springmarsh Healthcare Limited - £606,095 (2022 - £225,207)    

Limetree Healthcare Limited - £1,037,763 (2022 - £381,451)    

Windmill Helathcare Limited - £431,445 (2022 - £90,044)

Ashlyn Healthcare Limited    - £126,518 (£34,096)    

Goldenley Healthcare Limited - £290,682 (2022 - £116,792)                        

Winifred Healthcare Limited - £646,307 (2022 - £192,368)

Okeley Healthcare Limited    - £90,330 (2022 - £188,406)

Longfield Healthcare Limited - £284,028 (2022 - £19,662)

Sweyne Healthcare Limited - £355,969 (2022 - £178,893)

Sherrel Healthcare Limited    - £755,744 (2022 - £165,575)                        

Hunters Healthcare Limited - £662,183 (2022 - £50,274)                         

Etheldred Healthcare Limited - £734,734 (2022 - £843,031)                

There were material transactions between the group and all of the above companies. Movements represent the transfer of funds into the group's treasury account and the re-assignment of inter group balances.

No guarantees have been given or received.

In the opinion of the director, the ultimate parent company is Excel Portfolios Limited, a company registered in Jersey. The immediate parent company is Revamp Limited, a company incorporated in Jersey. The ultimate joint controlling party is E. Ertosun and O. Ertosun.

The smallest undertaking for which group financial statements are prepared is Excelcare (Cambridge) Limited. The copies of these consolidated financial statements can be obtained from Kalamu House, 11 Coldbath Square, London EC1R 5HL.

The largest undertaking for which group financial statements are prepared is Excel Portfolios Limited. The copies of these consolidated financial statements can be obtained from St Paul’s Gate, Fourth Floor, 22 – 24 New Street, St Helier, Jersey JE1 4TR.